If the Recession Happened This Year…

 

 

There’s been a lot of fear recently that someone is going to fuck this grand economic cycle up. Of course the end of the boom is inevitable, and while players may debate as to when exactly the game will flip, it’s still fun to think about the consequences if it were to flip right now.

WeWork. Uber. Lyft. Here are some companies we know are running >=$1 billion dollar net income deficits. There are some others that I wouldn’t be surprised if they were leaking cash, such as Robinhood and Instacart. Within just the videogame industry I could easily spell out a dozen companies that might not last a hard market downturn: Humble, Chrono.gg, Discord, ELeague, etc. etc. The point here is that it’s all fun and games until you’re hit with the reality that you’ve got to make money in order for this whole business thing to work. The bust of 2000 provided us a great example of this;  many websites like to give outrageous free or low-cost deals to gain quick user growth, only to realize that before they could do anything with it they already ran out of cash.

Now, alternatively, who will thrive during a recession? Typically any company that provides necessities tends to do pretty well in comparison. Think of something like a Walmart, that provides most utilities like food and clothing at a very low costs. They certainly have low-margins, but in this case the volume really does make up for it.

I also don’t think GAFA would be likely to fail here. Although I do have speculations for some of these companies’ inevitable downfalls (a topic for a different post), I think the downfall is much farther off and is unlikely to occur during this upcoming recession. These companies have large bank accounts and even larger public images. While they may be weakened during this time period, I think they will have enough strength to last through the worst of it.

Anyway, that’s all for this one. If you want to keep in touch, check out my biweekly newsletter! Following this will give you the low-down of all the new stuff I’m working on, as well as some things I found interesting. As an added bonus, you’ll also receive the Top 10 Tools I Use on a Daily Basis to help better manage your workload and do higher quality work in a shorter amount of time. You can subscribe to the newsletter here.

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